Accumulation/Distribution index is a cumulative total volume
technical analysis indicator created by Marc Chaikin, which
adds or subtracts each day's volume in proportion to where the
close is between the day's high and low.
This ranges from -1 when the close is the low of the day, to
+1 when it's the high. For instance if the close is 3/4 the
way up the range then CLV is +0.5. The
accumulation/distribution index adds up volume multiplied by
the CLV factor, ie.
The starting point for the acc/dist total, ie. the zero point,
is arbitrary, only the shape of the resulting indicator is
used, not the actual level of the total.
The name accumulation/distribution comes from the idea that
during accumulation buyers are in control and the price will
be bid up through the day, or will make a recovery if sold
down, in either case more often finishing near the day's high
than the low. The opposite applies during distribution.
The accumulation/distribution index is similar to on balance
volume, but acc/dist is based on the close within the day's
range, instead of the close-to-close up or down that the
latter uses.
A Chaikin oscillator is formed by subtracting a 10-day
exponential moving average from a 3-day moving average of the
accumulation/distribution index. Being an indicator of an
indicator, it can give various sell or buy signals, depending
on the context and other indicators. |
